Possible Sale of Pulitzer Broadcasting Leaves Several Unanswered Questions
Jackson, David, St. Louis Journalism Review
The broadcast industry stood up and took notice at the end of February when St. Louis-based Pulitzer Publishing Company announced it had hired investment bankers to explore strategic options for the future of its broadcasting properties. The announcement spiked Pulitzer's stock - it rose 24 points that day.
When companies make announcements like Pulitzer's, it is tantamount to putting a "For Sale" sign on the front lawn. It is possible that when the investment bankers have completed their review Pulitzer will retain the radio and television stations, but analysts who follow broadcasting stocks predict a sale will be announced within six months.
Pulitzer was like many other newspaper companies. It got into broadcasting in the early days of radio and television. It was a natural extension. For many years, the company operated KSD-AM, KSD-FM, and KSD (Channel 5). In the 1960s, the Federal Communications Commission developed a mission to diversify media voices in the community. The rules were changed and the cross-ownership of newspaper and broadcast operations in the same market was outlawed. The radio stations were sold to Gannett. The television station was traded to Multimedia for a television station in South Carolina.
(Editor's note: KSD is now KTRS, which is owned by a local group headed by Tim Dewey. KSD-FM was sold to American Radio Systems, which is in the process of merging with CBS Inc., which owns KMOX. Multimedia which owned KSDK (Channel 5) (the former KSD-TV) merged with Gannett which no longer owns any radio stations.)
By selling or trading its St. Louis broadcasting properties, Pulitzer began an expansion into television. It acquired television stations in Des Moines; Omaha; Louisville; New Orleans; Orlando; Winston-Salem, NC; Greenville, SC; and Lancaster, Pa. It also picked up two AM and one FM radio station in Phoenix. All of the stations are regarded as well-run and profitable by the investment community, and for a number of years have produced the bulk of profits and cash flow for the parent company.
So why sell?
There are a couple of good reasons which. are easy for analysts to find, and a few others which have to do with how closely held, family-based media companies will be run in the future.
The first reason is fairly straightforward. The market for television and radio stations is very high, with buyers paying huge sums for properties. Fox, UPN and WB Network stations are selling for 12 to 15 times cash flow, which adds up to hundreds of millions of dollars. Pulitzer's stations are all long-established affiliates of NBC, CBS and ABC. They could fetch an even greater premium.
The second reason is that. the regulatory environment in which broadcasters operate has significantly changed. Only a few years ago, companies could own only seven television stations. Today, one company Can own stations that cover up to 35 percent of the country's population. And through local marketing or joint sales agreements, one company can operate multiple stations in the same market. As an example, the company that owns KDNL-TV, Channel 30, as well as radio stations WVRV-FM, KPNT-FM, WIL-FM, KHTS-FM and WRTH - Sinclair Communications - owns, operates or programs 55 television stations and about an equal number of radio stations around the country.
The third reason is size. For Pulitzer to remain a player in the broadcasting community, it would need to begin buying up radio and television stations. While today's market is good for sellers - it is expensive for buyers. Pulitzer would need to take on a huge amount of debt or issue more stock to expand and keep pace with broadcasters like Sinclair, Fox or Clear Channel Communications. …